#10. Setting up your base Smart hiring becomes one of the most important skills to cultivate as a business owner.
Part of being a company instead of an independent contractor or solo developer is assuming a certain degree of formality. One of the first things that most people do when starting a company is lease office space. However, this should not be an automatic decision or something to be taken lightly.
Even though the freedom and prestige of having your own business address are enticing, it comes with a steep price. Leasing office space represents a relatively large fixed cost that you need to pay every month, regardless of how much or if you are generating income. Expect to pay at least $1000 for any kind of professional office space that you would be proud to call your own, and large enough to scale up with you, at least in the short-term.
Additionally, there are utility costs that need to be paid—money that is due each month—regardless of how much income you are bringing in. Here are some likely examples:
Internet access (DSL/Cable service)Telephone serviceElectric/gasGarbage/recyclingWater/sewageCleaning serviceHigher liability insurance
So you are looking at the neighborhood of $1500 a month for a nice, roomy office space and all of the other important fixed costs and services that come with it. That might not seem like much, but when you’re just getting started and not making much or any money, it’s not fun to pay these bills.
But it doesn’t end with the fixed, ongoing costs. You’re going to spend more money than you expect on one-time equipment costs, too. Here’s a starter list for a little taste:
Computer(s) for each employeeSoftware for each employeePrinter(s)ScannerStereo and/or speakersTelephone(s)Desks and chairs for each employeeTable and chairs for public spaces, such as a lunch table or conference room setupFiling cabinet(s) and file foldersPaper, pens and pencilsLightingArt and decorationCoffee MakerDishes/silverware/kitchen stuffSnacks and beveragesMagazines/newspapers/booksToys and gamesTissuesToilet paper
Considering all of these costs, there’s something to be said for initially holding off on getting office space. Many companies make the investment before they need it, adding a layer of financial risk. Particularly in software, when a company is getting started, there are often not enough people to require office space (four full-time people is a good over/under number) or a real need for it (clients and investors often like to meet in their own offices, not come to yours).
We didn’t have office space until we were in business for a 18 months, and during that time we landed a bunch of sweet clients, companies like PayPal, Shutterfly, and MITRE, an arm of MIT and a service provider for the U.S. Department of Defense. While we would have liked working in a sexy office space right from the beginning, we didn’t need it.
So while you might have hired a handful of people or about to hire, a lot of revenues coming in that you can count on for some months into the future, or both; more often you’re not that large or financially stable enough to make moving into dedicated space a priority. Don’t be afraid to get things started out of your house and evolve into a “real” home base when the timing is more appropriate.
#11. Hiring the right people The most important thing your company does is hire people. The employees ultimately determine the personality and culture of your company, the content and quality of the products and services you create, and set the trajectory for eventual success or failure. Smart hiring becomes one of the most important skills to cultivate as a business owner.